UBI - GST Boost

Universal Basic Income Proposal

Shift Capital to the GST to reduce the current income disparity to

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{tblBoosts}

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The following elasticities amplify the effects of the above sliders on . Supply and Demand equalize at a new CPI "basket" price:

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Perturbation theory models buying up the above capital over four years, starting in 2024.

Details: UBI/GST/Taxation
At present transfer payments deliver minimal UBI by taxing earnings of other people. This suggests funding UBI from earnings of capital.

The first key is to understand that money is no longer backed by gold et. al. but is now "printed" by Central Banks as simple journal entries.

Taxation and the Key Interest Rate now pull it back out of the economy. Taxes do not fund governments, as Laffer et. al. assumed. Instead taxes recoup government spending of printed money to control inflation. Alternatively, a Sovereign Wealth Fund can invest (not spend) new money.

The second key is to buy shares from "the rich" rather than confiscating wealth with taxation; and to select firms who are already winners.
That shifts private capital into higher risk/reward investments, harnessing the Entrepreneurial Spirit - if people do not resent competition from debt money in the stock market. The following slider is zero if sellers do not change whether they re-invest the proceeds:

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We will also assume that the ratio between GDP and total capital in the economy remains constant, so new investment should lead to GDP growth.

New Role of Taxation
Normally government spending leads to reduction of the GDP by taxing income groups who would otherwise invest. In this case, dividends replace a big part of transfers to "the poor", who then spend them and get taxed. That leads to a lower overall tax rate.

The Low Beta Criterion
Options Trading is a proven way of managing risk, and it can reliably select "safe" investments. Aside - the Maple Eight can be aggressive.

The EMA200 Criteria:
To determine (past) growth rate and mid-point of stocks one can use the slope and location of the EMA200. The down-side is that it further reduces Beta of the shares the Fund already holds, so Fund Managers would need to avoid getting locked into a small group of investments.

2024 Conditions Before Perturbation:
Inflation was 2.4%/yr, prime interest rate was 7.5%/yr, unemployment was 6.7% and Supply and Demand both equaled GDP of $2241 Billion. GDP growth rate has been near 2%/yr and Return On Capital has been 8.5%/yr.

GDP equals spending (Demand Side);
=> 23% spending by Governments, the revenue for which was
    > Personal Income Tax 46.4%,
    > Non-Resident Income Tax: 2.9%
    > Corporate Income Tax: 21.0%,
    > Other: (GST, energy taxes, etc.) 29.5%.
    =>>Federal revenue (Google AI): $459.6Bn. Provincial totals: $180.6Bn. We will use sliders to change these percentages, and will assume revenues will change by the same percentage as GDP does.
=> 77% requiring capital: ($20,200Bn)
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The need for investment/savings drives the "tax and spend" objection of the political right.
However, lower labor cost gives employers more to invest when wages do not have to cover services and infrastructure that are public.
(See "Land, Labor and Capital" below.)
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    >55% of the GDP was consumption & debt
    =>>Shelter accounted for 32.1% ($396Bn) and food 15.7% ($192Bn) of consumption.
    =>>Household mortgages are a large portion of debt.
    =>>The total value of Canada's housing assets was $4200 Bn in 2024, so the equivalent of rent would be .396/4.2 or 9.4%/yr.
    =>>~1/3 of households (~5 million) rent their homes.
    =>>Household debt was 176.4% of disposable (gross-tax) income. This ratio is similar over income levels, and the average rate was 4.2% more than the Key Rate below.
    >and 21% was investment
    =>> Households saved approximately $3785 each: 3.8% of GDP, totaling $85.2 billion.
    =>>Savings are what is left over after Consumption, Interest and Taxes; and
    =>>by the Savings Identity, it is part of overall Investment of 21% of GDP.
    >and 1% net exports.
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GDP also equals income (Supply Side):
    > distributed over 31.814 million tax returns (22.5 million households).
    >Corporate Income comes from Consumer spending
    =>>Part of it is diverted into Savings/Investment, but much of the $20,200Bn investment is financed by debt.
    > Average Individual Gross Income: $70.4k from $Bn 2241 GDP/ 31.8 million tax returns.
    >

Algorthms for This Model:

This is an interactive program which compares a UBI proposal to the published data for the years 2024 to 2026, with extrapolation to the whole of 2027 from the first fiscal quarter. It is not capable of predicting a whole economy of a country like Canada.

Notes - Economic Modelling:

Perturbation theory assumes that small changes are made to a known situation and predicts the results. Large (invalid) changes might be changes to the corporate tax rate etc.

Mathematical Model: 1/3 of the input to widget-production is capital.

notes 1 yyy Mathematical Model: 2/3 of the input to widget-production is labor.

GDP 2024 was $2.421Bn / CPI of $159.8 or 15.15 million "baskets" of goods and services. The above reduction in labor must be offset by new capital (slider below). ????

Sliders From Other Pages:

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